If we were to split?

tizzle6560

Some advice would be much appreciated on this -

My partner and I are both named on the mortgage, and we also have a deed of trust stipulating who would come away with what if we were to split. This entails my partner being entitled to 5% of the sale price only when we come to sell.

We are coming up to the end of our initial 2 year fixed and so will likely shop around for a new rate.

Things haven't materialised quite as we would have hoped for and should the worst happen and we split up, we are both thinking about what the best course of action would be if I were to stay in the property and she were to leave.

I'm assuming I would have to go through affordability checks on my own to see if I could pay the mortgage on my own/ my parents would buy her share off her if not.

Im sure this is not going to be a simple process should it come to it but just some guidance on the matter would be great, thanks.

HappyMJ

tizzle6560 wrote: »

Some advice would be much appreciated on this -

My partner and I are both named on the mortgage, and we also have a deed of trust stipulating who would come away with what if we were to split. This entails my partner being entitled to 5% of the sale price only when we come to sell.

We are coming up to the end of our initial 2 year fixed and so will likely shop around for a new rate.

Things haven't materialised quite as we would have hoped for and should the worst happen and we split up, we are both thinking about what the best course of action would be if I were to stay in the property and she were to leave.

I'm assuming I would have to go through affordability checks on my own to see if I could pay the mortgage on my own/ my parents would buy her share off her if not.

Im sure this is not going to be a simple process should it come to it but just some guidance on the matter would be great, thanks.

To sell her share of the property to your parents would involve a change to the mortgage. Your parents would be named on the mortgage and be jointly liable for the payment of the mortgage in full with you. You would also be financially linked to your parents.

Can you take out a personal loan to buy her share and then take her name off the mortgage so you own the property in full? Yes you would need to afford to pay the mortgage using only your own income.

tizzle6560

HappyMJ wrote: »

To sell her share of the property to your parents would involve a change to the mortgage. Your parents would be named on the mortgage and be jointly liable for the payment of the mortgage in full with you. You would also be financially linked to your parents.

Can you take out a personal loan to buy her share and then take her name off the mortgage so you own the property in full? Yes you would need to afford to pay the mortgage using only your own income.

How would we quantify her share if it is set as '5% of the final sale price'? Maybe go on the current approximate value of the property?

tizzle6560

Also another question is - if we go for say, another 2 year fixed deal; is it that easy for her to just exit the mortgage arrangement or would she effectively be tied to it for another 2 years?

HappyMJ

tizzle6560 wrote: »

How would we quantify her share if it is set as '5% of the final sale price'? Maybe go on the current approximate value of the property?

5% isn't that much so that's up to you to negotiate how much 5% is.

5% of £100,000 is £5,000. If she thinks it's worth £110,000 then it's only £5,500. For an easy life just go with the higher figure.

If it was 50% then you'd fight over the figure but not with 5%.

tizzle6560 wrote: »

Also another question is - if we go for say, another 2 year fixed deal; is it that easy for her to just exit the mortgage arrangement or would she effectively be tied to it for another 2 years?

That depends on what you agree. If she's signing a two year fixed rate mortgage then she intends to stay for those 2 years. You can't remove her by buying her out and you can't expect her to go until the end of the 2 years. She would be tied to it for 2 years....if you insist she goes you would have to negotiate with the bank to remove her name without paying ERC's before buying her out. That might not be so easy.

tizzle6560

HappyMJ wrote: »

That depends on what you agree. If she's signing a two year fixed rate mortgage then she intends to stay for those 2 years. You can't remove her by buying her out and you can't expect her to go until the end of the 2 years. She would be tied to it for 2 years....if you insist she goes you would have to negotiate with the bank to remove her name without paying ERC's before buying her out. That might not be so easy.

It is not so much that she would be intent on staying for the full 2 years necessarily; as it stands we are aiming to resolve things but this may well carry on past our initial 2 years and will need to renew. So in the event that we do split up at some point within the next 2 years, how difficult would it be to remove herself from the tie of the mortgage?

If the answer is very, then we need to really think about what to do in the next couple of months before we renew, as I would feel dreadful if she was effectively tied in for 2 years and not being able to find another place etc. Obviously all on the provision that I could manage the payments on my own/ with parents on the mortgage.

AnotherJoe

tizzle6560 wrote: »

It is not so much that she would be intent on staying for the full 2 years necessarily; as it stands we are aiming to resolve things but this may well carry on past our initial 2 years and will need to renew. So in the event that we do split up at some point within the next 2 years, how difficult would it be to remove herself from the tie of the mortgage?

If the answer is very, then we need to really think about what to do in the next couple of months before we renew, as I would feel dreadful if she was effectively tied in for 2 years and not being able to find another place etc. Obviously all on the provision that I could manage the payments on my own/ with parents on the mortgage.

It depends on what you mean by "difficult

If she wants to bail out, then you could get a new mortgage. There will be an Early Repayment Charge unless you went for a mortgage that doesn't have that. Or you could sell the house.

But ... if you dont want to sell the house, what then? You could buy her out, but can you afford it? Suppose you cant, now its "difficult". Suppose you refuse to sell? She might then take you to court to force a sale .. so now its getting "really difficult".

Do you realise you dont have to take out a new fixed term mortgage when the old one comes to the end of its fixed period? You can just go onto standard variable rate? The repayments will jump but if its just for a month or three you are probably best advised to do that than lock yourselves in for two years? But if that happens and then she goes, you still need to sort the finances out, have you checked if you could get a mortgage on your salary alone?

Thrugelmir

Is it possible for you to obtain a mortgage in your own name and pay your partner their share. These are the 2 key questions you need to answer.